Gati Ltd. Has issued 30,000, 8% debentures of Rs 100 each of which one-third is due for redemption on
March 31st 2018. The company has in its debentures redemption reserve account a balance of Rs. 1, 20,000
on 31st March 2017. Required investment is made in fixed deposit on 30st April 2017 bearing interest @ 6%
P.a Record necessary journal entries for the redemption of debentures .Assume that Gati Ltd. Is an unlisted
company.
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Date Particulars LF Amount (in Rs) Amount (in Rs) Apr 30, 2014 Debenture Investment A/c (3,00,000*1/3*15%) Dr 1,50,000 To Bank A/c 1,50,000 (15% investment made one year before redemption of debentures) Mar 31, 2015 Statement of Profit & Loss A/c (30,000*100*25%-3,80,000) Dr 3,70,000 To Debenture Redemption Reserve A/c 3,70,000 Interest on Fixed deposits A/c (1,50,000*6%*11/12) Dr 8,250 To Statement of Profit & Loss 8,250 (Interest earned for 9 months)
Regards,
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